Mortgage borrowing falls for first time in three months

Meanwhile, the number of mortgage approvals reached its highest point in over two years.

Net mortgage borrowing saw its first decrease since June 2024, according to the latest Money and Credit data from the Bank of England. Despite falling mortgage rates in recent months, it found that between August and September, the amount of mortgage debt borrowed by individuals dropped by £0.3 billion to £2.5 billion.

Despite this, net mortgage approvals for September increased month-on-month, climbing from 64,900 to 65,600. This sees this figure hit a two-year high for a second consecutive month following the report for August.

Similarly, net approvals for remortgaging (with a different lender) also rose in the same period for the second month in a row, rising by 3,100 to 30,800 in September.

Rising confidence for first-time buyers

Higher rental costs, combined with lower mortgage rates partly brought on by the cutting of the Bank of England Base Rate to 5.00% in August, has seemingly had an impact on buyer confidence, particularly for those looking to purchase their first property.

The October House Price Index from property website Zoopla revealed that first-time buyers comprised the largest buyer group in 2024 so far, accounting for 36% of all sales. It also found that on average, mortgage payments for a typical first-time buyer property in the UK were 17% cheaper than renting.

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, explained that the easing on mortgage lending in September could therefore “reflect the high number of transactions carried out by first-time buyers who are likely to be purchasing smaller homes”.

Is now a good time to commit to a deal?

Despite their recent decline, mortgage rates have risen over the past couple of weeks, which may concern those planning to take out a mortgage in the near future. Furthermore, borrowers will also be looking to tomorrow’s Autumn Budget to see if this will have any impact on their homebuying plans.

However, with the expectation of another base rate cut before the end of the year, mortgage rates could soon resume their downward trajectory and make homeownership slightly more affordable.

Working out which mortgage deal is best for you can be a difficult process. With this in mind, speaking to a mortgage broker can provide further advice and support as they can offer guidance for your specific situation.

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